We're solving the pay gap - the wrong way

Time for a better debate about what is happening to the pay of women and men.

One of the longest-running campaigns in modern British politics is that for equal pay. As many have pointed out it's over 40 years since the Equal Pay Act yet the gender gap still persists. The good news is progress - even if it is all too slow - is being made. The bad news is that the reason that progress is being made is due to male wages stagnating.

Figure 1: Full-time pay gap, 1997-2011 (median £ hourly pay excluding overtime)

But first, let's pause on what we mean by the "gap". Typically the headline measure used (favoured by the ONS) is that between full-time male and female median pay - that is, typical full time wages (others argue that the "mean" wage should be used as this captures big gender inequalities at the top of the earnings spectrum). But any headline figure cloaks the reality that if you segment the jobs market by age, occupation, or income a different story emerges about pay inequality.

Take age. There isn't a pay gap for the under-25s, and only a pretty modest one for the under-30s. A larger gap starts to open up for those in their 30s, which then increases dramatically for those 40 and above.

Or look at part-time work, which is excluded from the headline pay gap figure. The part-time pay penalty affects millions of women, appears to be getting larger over-time, and, sadly, is bigger in the UK than anywhere else in the EU. There are certain types of jobs that tend to be offered part-time and they are concentrated in low-paying sectors. The result is industrial scale occupational downgrading following childbirth - 48 per cent of mothers on low to middle incomes take a lower-skilled part time job after having children (the figure for graduates is 42 per cent). The price is paid by individual women but also by the wider economy too. The part-time penalty is also likely to reflect a major power imbalance in local jobs markets: big employers appear able to hold down part-time wages in part because there are many women needing to work very locally often due to caring commitments.

There are, of course, many different reasons for the pay gap. And once economists consider some of the main factors such as skill levels, occupation, and time spent out of the labour market a chunk of the "gap" is accounted for (pdf) though a very large part isn't (studies often show that the majority remains unexplained).

How to interpret all this is a matter of some controversy. Those who want to dismiss gender inequalities often imply the "unexplained" gap is largely a mirage or a reflection of female preferences about the nature of the employment roles they want to undertake. Which is an account that entirely side-steps the crucial question of why it is that female-dominated sectors of our economy are so often afforded low status and low pay. I don't think we can put this down to a series of coincidences.

The question of how much of the headline pay gap can be "explained" is often where these discussions about gender and pay end. Except they shouldn't. Because vital though it is, on its own it doesn't get to the heart of some fundamental changes in the nature of gender, work and pay - changes which are also showing up in the shifting nature of poverty.

For a start, if our eyes are trained solely on the headline pay gap we may miss the fact that the reason it continues to fall is changing. Throughout the late 20th century we got used to the idea that with a growing economy typical male wages should generally rise, and female wages should slightly outpace them as they catch up. There would be two rising tides, but the female one would rise faster.

Not now. The progress made on the pay gap over recent years has resulted from female wages climbing slowly while the typical man's pay has flat-lined. This isn't how it was supposed to be.

Figure 2: GDP per capita and full-time wage growth by gender, 1971-2011 (indices of GDP and median wages 1971 = 100)

Dig deeper, as new work by Paul Gregg with the Resolution Foundation does, and we find the pay gap between mothers and fathers has been closing significantly faster than that between men and women more generally - suggesting shifts in earnings responsibility occurring within the family. Moreover, we are also seeing important changes in pay within the genders. Among women we see that since the mid 1990s mothers have experienced faster wage growth than other women. The opposite has happened among men: the wages of fathers' have fallen behind those of other men, to the tune of almost four per cent over the same period. All of which is pretty striking. And none of which is illuminated in changes in the headline pay gap.

We don't know for sure what is behind these trends. But we do know that the pay inequalities within families tends to be self-reinforcing. Couples often arrange their affairs to benefit the career prospects of the highest earner - for instance, in terms of who opts to go part-time following childbirth, who does overtime, or indeed whose job prospects it would be worth moving house to further. These decisions tend to greatly magnify any pre-existing pay differentials within the family. In the past this would have overwhelmingly boosted men's pay at the expense of women's. But with the pay gap for those in their 20s having largely disappeared it may be that there is a growing number of households where these family adjustments are benefiting the mother.

Another possible explanation would point to the rise in part-time working by men - a longer term trend that has accelerated over recent years due to the sharp growth in under-employment. Perhaps there is a bit more equality in how the part-time pay penalty is being shared out across the sexes (pdf), with more men now suffering too? There is bound to be some element of this going on. But this can't be the main explanation not least as male part-time working is still the exception rather than the rule, and because the increases we've seen have been more concentrated among men without children rather than fathers.

Figure 3: Rise of part-time work amongst men

Whatever the cause, it's pretty clear that the poor performance of men's wages - particularly fathers - is closely related to another little noticed trend we see: the steep rise in poverty rates among "single earner couples" (the great majority of whom still have a male bread winner). This group now accounts for a larger share of overall child poverty than out-of-work lone parents.

Figure 4: Poverty by family type, 1994-95 to 2009-10

Like many things in politics it's not hard to see how these shifting patterns of pay and family disadvantage could be used to help justify competing policy agendas. Some will react to the demise of the traditional male breadwinner family by claiming that this only reinforces the case for a transferable marriage allowance (let's leave to one side the fact that many of these single earner couples won't be married).

Alternatively, and for me far more convincingly, the pivotal role of female employment in securing rising living standards for low to middle income households, and the persistently low levels of child poverty in dual earning households, should be seen as a spur to a policy agenda that would increase the affordability of childcare, reduce the part-time pay penalty for women and men (by expanding higher quality part-time work) and favour welfare reforms that encourage rather than deter second earners (the impending universal credit is about to do the opposite).

Regardless of which of these views you favour, what should concern both sides of this debate is how little each has to say about the underlying cause of male wage stagnation - particularly among low-earning fathers and young men. That's an issue everyone across the political spectrum should be focussed on. Yet silence reigns. So let's rightly redouble our efforts to close the pay gap. But let's make sure we close it the right way.

 

40 years since Barbara Castle passed the Equal Pay Act, the gender gap still persists. Photograph: Getty Images

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

Photo: Getty
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“I'm very much out on my ear”: what it's like becoming an ex-MP

Returning to normal life isn't that simple.

The week after June's snap election, Theresa May faced the 1922 Committee of Tory MPs. Her eagerness to appease those angered by the loss of the party's majority worked wonders, with Boris Johnson describing her performance as “stonking”.

It helped that she acknowledged the personal cost of the election for MPs who had lost their seats. The Guardian quotes one MP as saying: “The party is going to help them, some of them are in dire financial situations. She did say sorry, several times. She apologised for colleagues losing their seats, for making the call about the early election.”

Elections are based on numbers: swing; votes; majority; seats – but there is a human toll to losing. Jobless overnight, often without experience directly applicable to another career, many ex-MPs struggle in the weeks following defeat.

While May was referring to her Conservative peers, losing a seat is an experience also familiar to Liberal Democrat Sarah Olney. The former MP for Richmond Park made headlines by overturning Zac Goldsmith’s 23,015 majority in the December 2016 by-election – only to lose the seat by 45 votes six months later.

“I don't get any money at all,” she says. “I got paid up to 8 June and then nothing. I don't qualify for loss of office allowance or statutory redundancy because I wasn't there for long enough. You have to have been there for at least two years.”

Olney, who intends to look for a new job after the summer holidays, describes herself as a “little bit cheated” by the snap election. “I was expecting – especially when we had a Fixed-term Parliaments Act – that parliament was going to last until 2020. So to suddenly find that it's changed means that you don't qualify for anything.”

Even if her situation isn’t “dire” as was alluded to by May and the 1922 Committee, she still finds herself without financial security.

“For me personally, it does mean being without any money at all,” says Olney, who left her job in accountancy to stand as an MP. “I have a mortgage to pay and children to feed and I'm lucky that I've got my husband and he's earning and we've got savings to live off, but I'm very much out on my ear unexpectedly. It's not quite the terms you sign up to, but equally you have to accept that it's not a normal employment either.”

Returning to “normal employment” is not always a painless process. Dr Edmund Marshall, Labour MP for Goole from 1971 until the seat’s abolition in 1983, describes a “widespread suspicion” from potential employers that ex-MPs would be seeking to re-enter parliament at the earliest opportunity.

He also bemoans the nature of the career change itself. “An ex-MP has, in the nature of that role, been a generalist – especially if he or she had long service in parliament – and so is in a weak position when applying for any specialised job, for which there will usually be many other applicants with more up-to-date relevant experience,” says Dr Marshall, who went into lecturing and Church of England policy after leaving parliament.

Another downside for Olney is that the legitimate scrutiny MPs are exposed to will continue even after leaving the Commons. “Every single thing I've done has been under scrutiny and has been reported negatively, even though there's very little to say,” she says. “I'm pretty squeaky clean – I have no skeletons in my closet. Anything people could use, they would. So anything I do from now on would be treated the same. It's one thing to be under that scrutiny when you're running for public office, but it's entirely another when you're just trying to earn a living.”

Most of the “relentless” criticism that she has faced on Twitter has faded, but she remains sceptical of the reaction to a new position. “It might well be that I could take a job and people just won't notice or care,” she says, “but it's been my experience ever since I got selected that anything I did was criticised, so I would expect that to continue I guess.”

When it comes to jobs, Olney remains unsure of her direction, describing herself as being at a “crossroads”. “I'm conscious I might face criticism for anything I might do that uses my political experience,” she explains. “Given that I'm now just a private individual trying to earn a salary, I don't want to have to answer for that.” She laughs: “But I think equally my political experience sits rather strangely on my accountant's CV.”

Olney’s defeat on 8 June left more than just one career affected. She describes the “frustration” of having to lay off her newly appointed staff. “I think one of the things I didn't realise – and I wonder if most people don't realise about being an MP – is you're pretty much almost like a sole trader, and you have to set up everything from scratch,” she says. “You have to hire your own staff and you have to find your own office premises. There's a lot of work involved in doing all of that, and I was only just getting to the end of that set-up phase.

“And then all of a sudden, a general election comes along and having just hired all these staff, the next thing I'm doing is sending them all redundancy letters.

“So that for me was a huge frustration that we never really got started, never really got going, never really got to do all the things that I would have liked to get done.”

Despite saying that there was a lack of support for the transition period after her by-election win, Olney says that, from her experience, the infrastructure for leaving parliament is “pretty good”.

Yet as Olney has experienced, the financial support from the Independent Parliamentary Standards Authority (IPSA) has been cut back following the expenses scandal of 2009. Many MPs, if they have not served long enough to receive a pension, rely on IPSA’s payout to tide them over until re-employment. In 2015, this was capped at £33,530, made up of one month’s pay for every year in parliament. Now, the figure is capped at £29,340, and is calculated from both the number of years served and the former MP’s age.

And then there's actually finding a new job. Keith Best, the Conservative MP for Anglesey (renamed Ynys Môn in 1983) between 1979 to 1987, claims to have made “over 400 applications” after a conviction for fraud forced him to leave parliament.

Dr Marshall recalls a similar, if less extreme, application process. “In 1983, it took me six months to find good, alternative employment,” he says. “I made an application for 56 specific, advertised jobs, and was interviewed for 14 of them. In the end I was offered two good posts, so at least at that stage I was able to make a choice!

“I think the good rate of getting interviews, 25 per cent, was because the selectors were curious to see what an ex-MP looked like. So that curiosity factor is a small advantage that the ex-MP has.”

Meanwhile, Michael Meadowcroft, Liberal MP for Leeds from 1983 to 1987, describes having “survived through journalism”, writing for a number of different outlets before eventually chairing the Electoral Reform Committee.

While the experience of former MPs appears largely consistent across party lines, two former Labour MPs argue that Conservative politicians face advantages when it comes to gaining re-employment. Tony McWalter held Hemel Hempstead for Labour from the seat’s creation in 1997 until 2005. He cites “two advantages” for former Tory MPs.

“On the one hand,” he says, “their party thinks that to be an MP is not a full-time job, so frequently they keep paid positions while they are MPs without incurring the wrath of their constituency members. This makes the transition to being a former MP much smoother.

“Secondly, many Conservative MPs have close friendships with those who run companies, and that in turn means there are likely to be people in positions of considerable [influence] to whom they can turn when the electoral axe falls.”

Dr Marshall agrees it is easier for Conservatives, but attributes this to political bias rather than connections. “All ex-MPs, when job-hunting, are likely to encounter some party political prejudice among the selectorate,” he says, “but I think this poses particular difficulty for Labour ex-MPs, because the Tories probably have a majority among the selectorate. For instance, it appears easier for ex-Tory MPs to land positions on boards of directors.”

Keith Best and his 400 unsuccessful applications may disagree.

Yet losing a seat is not all doom and gloom. Sir Hugh Bayley, the former Labour MP for York Central, writes of the personal and professional opportunities afforded by stepping down in 2015 after 23 years’ service. “My wife, Fenella Jeffers, had had enough of a spouse who was rarely at home, and focused mainly on politics even when there,” he explains. 

“Fenella was born abroad, in Nevis in the Caribbean, and said she was going home, to live there much of the time. We decided it was her turn to set the ground rules for our lives.

“I now spend a few months a year in Nevis. I draw a parliamentary pension but work (pro bono) as a member of the UK/Europe Board of the International Rescue Committee (the New York-based humanitarian NGO led by David Miliband), and (paid, part-time) as a lay member of the Nursing and Midwifery Council.

“Fenella spends a few months a year in the UK so we spend roughly half our time together, which is far more than we did when I was an MP, and it is allowing us to rebuild the relationship which nearly collapsed because of the pressure of all those years when I was in Parliament.”

Olney echoes those sentiments. Speaking over the phone before going to play football with her son, she says: “The up-side of only having been there six months is that I had a normal life before, and it's been an opportunity to reconnect with that normal life, so spending more time with my children.

“It's been an opportunity to catch up with people and rediscover some of the other things I used to do before I became an MP.”

And yet, the call to the Commons is persistent. When asked if it was in her plans to re-stand for election, Olney was emphatic. “Yes. Yes, absolutely it is. It definitely is.” Referring to Goldsmith, she says: “He had a majority of 23,000 two years ago and now he's got a majority of 45. That's just the momentum that we've got going on here locally and I don't want to spoil that, I want to get over the line next time.

“For me, it's not so much personal. I am now out of work, but I will find another job reasonably easily and I will get back the life I had before. I just don't feel Zac Goldsmith is the best person to represent this constituency and I'm just really annoyed he's our MP again.”

Olney’s point that being an MP is no “normal employment” was also part of the appeal for her predecessors. “It is an absolutely marvellous job,” writes McWalter over email, emphasis his own. “You might be able to help, not dozens of people who are victims of injustice or callous indifference, but thousands of them.

“You will get opportunities to expand your knowledge to be able to do the job, and I found my placements with police service and with the Royal Navy during my time in parliament of extraordinary value.

“You will find the job has dazzling variety, so you need to become knowledgeable about a huge range of matters – from war to warts, and you have to employ the knowledge so gained to improve the lot sometimes of people throughout the country.

“Just to serve on a select committee, [as] I did [on] Northern Ireland at a crucial time, and then science and technology, is to be faced with challenges every bit as demanding as those faced by those who stay in the academic world.

“Most people who have been Members of Parliament have found the experience wonderful. It is sad, however, that the skills you acquire are redundant the moment you lose your seat. Those who seek to get into Parliament are often rational and altruistic, for they are applying for one of the best jobs you could do. But it would be a service to our democracy if their offer to serve were to be put into proper context."

McWalter does realise that not every aspect of the job, and the consequences of losing it, are positive. “Some have to pay for their time of service by having a quality of life a lot worse than they had before they were successful in an election,” he says. “That is the price to be paid by many, and the subsequent strains on mental health, on marriage, and on financial security, are sometimes such that those who are the family and friends of former MPs wish they had never been elected.”

Best concluded on a similar note: “Being an MP these days is so risky that I fear that it will deter many, if not in their own interests at least in those of their families.”

Nevertheless, for many MPs, working in the Commons is not a career that can be simply left behind. For them, the price of entry – and exit – is worth it.